Peru | Year-on-year inflation continues to decline in March, despite rising food prices

Summary

The CPI increased 0.81% month-over-month in March, driven by weather anomalies and the adjustment in student pensions. In contrast, the decrease in transportation prices and the return to normal fare prices after the Carnival holidays helped moderate inflation.

Key points

• Key points:
• The annual inflation rate fell to 1.3% (February: 1.5%), below the center of the Central Bank's target range (2%, +/- one percentage point). This is the lowest level since September 2018.
• The underlying inflation component increased by 0.64% month-on-month in March. This represents a year-on-year increase of 1.9% (2.1% in February), a decline largely explained by a high comparison base.
• In our baseline scenario, the downward trend in inflation observed in recent months has run its course; in the second and third quarters, inflation will average between 1.5% and 2.0%, comfortably within the Central Bank's target. Later, in the final quarter of the year, inflation will increase due to the low year-over-year comparison base, closing 2025 at around 2.5%.

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